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EXHIBIT 99.1
RISK FACTORS
You should carefully consider the following risk factors and all other
information contained in this prospectus before purchasing our common stock.
Investing in our common stock involves a high degree of risk and you may lose
all or part of your investment. Please read "Special Note Regarding
Forward-Looking Statements."
RISKS RELATED TO OUR BUSINESS
WE HAVE A HISTORY OF NET LOSSES, AND WE EXPECT TO CONTINUE TO INCUR NET LOSSES
AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY
We are a development stage company with no revenues to date. We have incurred
net losses since our inception, including net losses of approximately $34.7
million for the year ended December 31, 1999 and approximately $19.2 million for
the three months ended March 31, 2000. As of March 31, 2000, we had an
accumulated deficit of approximately $115.7 million. We expect to make
substantial expenditures to further develop and commercialize our products and
expect that our rate of spending will accelerate as the result of costs and
expenses associated with increased clinical trials, regulatory approval and
commercialization of products. As a result, we are unsure when we will become
profitable, if at all.
FAILURE TO RAISE ADDITIONAL FUNDS IN THE FUTURE MAY AFFECT THE DEVELOPMENT,
MANUFACTURE AND SALE OF OUR PRODUCTS
Our operations to date have generated substantial and increasing needs for cash.
Our negative cash flow from operations is expected to continue into the
foreseeable future. The clinical development of Angiomax for additional
indications, the development of our other product candidates and the acquisition
and development of additional product candidates by us will require a commitment
of substantial funds. Our future capital requirements are dependent upon many
factors and may be significantly greater than we expect.
We anticipate that our existing capital resources, together with the net
proceeds from this offering, and interest earned on such proceeds, will enable
us to maintain our current operations for at least the next 12 months. If our
existing resources and the proceeds of this offering are insufficient to satisfy
our liquidity requirements, if this offering is not completed or if we acquire
any additional product candidates, we may be required to seek additional
financing prior to that time. We intend to seek additional funding through
collaborative arrangements and private or public financings, including equity
financings. Such additional funding may not be available on acceptable terms, if
at all. If additional funds are not available to us, we may need to delay or
significantly curtail our acquisition, development or commercialization
activities.
OUR BUSINESS WILL BE VERY DEPENDENT ON THE COMMERCIAL SUCCESS OF ANGIOMAX
Other than Angiomax, our products are in clinical phases of development and are
a number of years away from entering the market. As a result, if we obtain
regulatory approval to market Angiomax, it will account for almost all of our
revenues for the foreseeable future. The commercial success of Angiomax will
depend upon its acceptance by physicians, patients and other key decision-makers
as a therapeutic and cost-effective alternative to heparin and other products
used in current practice. If Angiomax is not commercially successful, we will
have to find additional sources of revenues or curtail or cease operations.
IF WE FAIL TO OBTAIN FDA APPROVAL, WE CANNOT MARKET ANGIOMAX IN THE UNITED
STATES
We will not be able to market Angiomax in the United States until we receive the
approval of the FDA. The process of obtaining FDA approval is lengthy and
uncertain. In February 1998, the FDA accepted our filing of a new drug
application, or NDA, seeking marketing approval for Angiomax. In May 2000, we
received an approvable letter for the use of Angiomax in the treatment of
patients with unstable angina undergoing coronary balloon angioplasty. Under the
terms of the approvable letter, before the FDA will approve our NDA for
Angiomax, the manufacturing facilities for Angiomax must pass FDA inspection,
and we must comply with other conditions. These conditions include adopting
FDA-recommended modifications to the proposed labeling for Angiomax, making
changes in documents describing our manufacturing and packaging of Angiomax and
recruiting and assessing additional subjects in a study investigating the
elimination of Angiomax in individuals with reduced kidney function. We have
recruited and assessed the additional subjects for this study, and in July 2000
we submitted to the FDA our response to the approvable letter. The FDA conducted
an inspection of the Angiomax manufacturing facility in June 2000. If our
response to the approvable letter or the inspection results are
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unsatisfactory or if we are unable to comply with the FDA's other conditions, we
will not be able to obtain approval for Angiomax in a timely fashion, or at all.
WE CANNOT EXPAND THE INDICATIONS FOR ANGIOMAX UNLESS WE RECEIVE FDA APPROVAL FOR
EACH ADDITIONAL INDICATION. FAILURE TO EXPAND THESE INDICATIONS WILL LIMIT THE
SIZE OF THE COMMERCIAL MARKET FOR ANGIOMAX
We are developing Angiomax for use in the treatment of ischemic heart disease.
The approvable letter we received in May 2000 covered the use of Angiomax for
the treatment of patients with unstable angina undergoing coronary balloon
angioplasty. One of our key objectives is to expand the indications for which
the FDA will approve Angiomax. In order to do this, we will need to conduct
additional clinical trials and obtain FDA approval for each proposed indication.
If we are unsuccessful in expanding the approved indications for the use of
Angiomax, the size of the commercial market for Angiomax will be limited.
FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WILL PREVENT US
FROM MARKETING ANGIOMAX ABROAD
We intend to market our products in international markets, including Europe. In
order to market our products in the European Union and many other foreign
jurisdictions, we must obtain separate regulatory approvals. In February 1998 we
submitted a Marketing Authorization Application, or MAA, to the European Agency
for the Evaluation of Medicinal Products, or EMEA, for use in unstable angina
patients undergoing angioplasty. Following extended interaction with European
regulatory authorities, the Committee of Proprietary Medicinal Products, or
CPMP, of the EMEA voted in October 1999 not to recommend Angiomax for approval
in angioplasty. The United Kingdom and Ireland dissented from this decision. We
have withdrawn our application to the EMEA and are in active dialog with
European regulators to determine our course of action including seeking approval
of Angiomax in Europe on a country-by-country basis. We may not be able to
obtain approval from any or all of the jurisdictions in which we seek approval
to market Angiomax. Obtaining foreign approvals may require additional trials
and additional expense.
THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS MAY BE TERMINATED OR
DELAYED, AND THE COSTS OF DEVELOPMENT AND COMMERCIALIZATION MAY INCREASE, IF
THIRD PARTIES WHO WE RELY ON TO MANUFACTURE AND SUPPORT THE DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCTS DO NOT FULFILL THEIR OBLIGATIONS
Our development and commercialization strategy entails entering into
arrangements with corporate and academic collaborators, contract research
organizations, contract sales organizations, distributors, third-party
manufacturers, licensors, licensees and others to conduct development work,
manage our clinical trials and manufacture, market and sell our products.
Although we manage these services, we do not have the expertise or the resources
to conduct such activities on our own and, as a result, are particularly
dependent on third parties in most areas.
We may not be able to maintain our existing arrangements with respect to the
commercialization of Angiomax or establish and maintain arrangements to develop
and commercialize any additional products on terms that are acceptable to us.
Any current or future arrangements for the development and commercialization of
our products may not be successful. If we are not able to establish or maintain
our agreements relating to Angiomax or any additional products on terms which we
deem favorable, our financial condition would be materially adversely effected.
Third parties may not perform their obligations as expected. The amount and
timing of resources that third parties devote to developing, manufacturing and
commercializing our products may not be within our control. Furthermore, our
interests may differ from those of third parties that manufacture or
commercialize our products. Disagreements that may arise with these third
parties could delay or lead to the termination of the development or
commercialization of our product candidates, or result in litigation or
arbitration, which would be time consuming and expensive. If any third party
that manufactures or supports the development or commercialization of our
products breaches or terminates its agreement with us, or fails to conduct its
activities in a timely manner, such breach, termination or failure could:
- delay the development or commercialization of Angiomax, our other product
candidates or any additional product candidates that we may acquire or
develop;
- require us to undertake unforeseen additional responsibilities or devote
unforeseen additional resources to the development or commercialization of our
products; or
- result in the termination of the development or commercialization of our
products.
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WE ARE CURRENTLY DEPENDENT ON A SINGLE SUPPLIER FOR THE PRODUCTION OF ANGIOMAX
BULK DRUG SUBSTANCE AND A DIFFERENT SINGLE SUPPLIER TO CARRY OUT ALL FILL-FINISH
ACTIVITIES FOR ANGIOMAX
Currently, we obtain all of our Angiomax bulk drug substance from one
manufacturer, UCB Bioproducts S.A., and rely on another manufacturer, Ben Venue
Laboratories, Inc., to carry out all fill-finish activities for Angiomax, which
includes final formulation and transfer of the drug into vials where it is then
freeze-dried and sealed. The FDA requires that all manufacturers of
pharmaceuticals for sale in or from the United States achieve and maintain
compliance with the FDA's current Good Manufacturing Practice, or cGMP,
regulations and guidelines. There are a limited number of manufacturers that
operate under cGMP regulations capable of manufacturing Angiomax. The FDA has
inspected Ben Venue Laboratories for cGMP compliance for the manufacture of
Angiomax and UCB Bioproducts for cGMP compliance in the manufacture of
pharmaceutical ingredients generally. Ben Venue Laboratories and UCB Bioproducts
have informed us that they have no material deficiencies in cGMP compliance. We
do not currently have alternative sources for production of Angiomax bulk drug
substance or to carry out fill-finish activities. In the event that either of
our current manufacturers is unable to carry out its respective manufacturing
obligations to our satisfaction, we may be unable to obtain alternative
manufacturing, or obtain such manufacturing on commercially reasonable terms or
on a timely basis.
Any delays in the manufacturing process may adversely impact our ability to meet
commercial demands for Angiomax on a timely basis and supply product for
clinical trials of Angiomax.
IF WE DO NOT SUCCEED IN DEVELOPING A SECOND GENERATION PROCESS FOR THE
PRODUCTION OF BULK ANGIOMAX DRUG SUBSTANCE, OUR GROSS MARGINS MAY BE BELOW
INDUSTRY AVERAGES
We are currently developing with UCB Bioproducts a second generation process for
the production of bulk Angiomax drug substance. This process involves limited
changes to the early manufacturing steps of our current process in order to
improve our gross margins on the future sales of Angiomax. If we cannot develop
the process successfully or regulatory approval of the process is not obtained
or is delayed, then our ability to improve our gross margins on future sales of
Angiomax may be limited.
CLINICAL TRIALS OF OUR PRODUCT CANDIDATES ARE EXPENSIVE AND TIME CONSUMING, AND
THE RESULTS OF THESE TRIALS ARE UNCERTAIN
Before we can obtain regulatory approvals for the commercial sale of any product
which we wish to develop, we will be required to complete pre-clinical studies
and extensive clinical trials in humans to demonstrate the safety and efficacy
of such product. We are currently conducting four clinical trials of Angiomax
for use in the treatment of ischemic heart disease. There are numerous factors
which could delay our clinical trials or prevent us from completing these trials
successfully. We or the FDA may suspend a clinical trial at any time on various
grounds, including a finding that patients are being exposed to unacceptable
health risks.
The rate of completion of clinical trials depends in part upon the rate of
enrollment of patients. Patient enrollment is a function of many factors,
including the size of the patient population, the proximity of patients to
clinical sites, the eligibility criteria for the trial, the existence of
competing clinical trials and the availability of alternative or new treatments.
In particular, the patient population targeted by some of our clinical trials
may be small. Delays in future planned patient enrollment may result in
increased costs and program delays.
In addition, clinical trials, if completed, may not show any potential product
to be safe or effective. Results obtained in pre-clinical studies or early
clinical trials are not always indicative of results that will be obtained in
later clinical trials. Moreover, data obtained from pre-clinical studies and
clinical trials may be subject to varying interpretations. As a result, the FDA
or other applicable regulatory authorities may not approve a product in a timely
fashion, or at all.
OUR FAILURE TO ACQUIRE AND DEVELOP ADDITIONAL PRODUCT CANDIDATES WILL IMPAIR OUR
ABILITY TO GROW
As part of our growth strategy, we intend to acquire and develop additional
pharmaceutical product candidates. The success of this strategy depends upon our
ability to identify, select and acquire pharmaceutical products in late-stage
development that meet the criteria we have established. Because we do not have,
nor intend to establish, internal scientific research capabilities, we are
dependent upon pharmaceutical and biotechnology companies and other researchers
to sell or license product candidates to us.
Identifying suitable product candidates and proposing, negotiating and
implementing an economically viable acquisition is a lengthy and complex
process. In addition, other companies, including those with substantially
greater financial, marketing
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and sales resources, may compete with us for the acquisition of product
candidates. We may not be able to acquire the rights to additional product
candidates on terms that we find acceptable, or at all.
IF WE BREACH ANY OF THE AGREEMENTS UNDER WHICH WE LICENSE COMMERCIALIZATION
RIGHTS TO PRODUCTS OR TECHNOLOGY FROM OTHERS, WE COULD LOSE LICENSE RIGHTS THAT
ARE IMPORTANT TO OUR BUSINESS
We license commercialization rights to products and technology that are
important to our business, and we expect to enter into additional licenses in
the future. For instance, we acquired our first three products through exclusive
licensing arrangements. See "Business -- License Agreements" for a description
of the terms of these licenses. Under these licenses we are subject to
commercialization and development, sublicensing, royalty, insurance and other
obligations. If we fail to comply with any of these requirements, or otherwise
breach these license agreements, the licensor may have the right to terminate
the license in whole or to terminate the exclusive nature of the license. In
addition, upon the termination of the license we may be required to license to
the licensor the intellectual property that we developed.
OUR ABILITY TO MANAGE OUR BUSINESS EFFECTIVELY COULD BE HAMPERED IF WE ARE
UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND CONSULTANTS
The biopharmaceutical industry has experienced a high rate of turnover of
management personnel in recent years. We are highly dependent on our ability to
attract and retain qualified personnel for the acquisition, development and
commercialization activities we conduct or sponsor. If we lose one or more of
the members of our senior management, including our chief executive officer, Dr.
Clive A. Meanwell, or other key employees or consultants, our business and
operating results could be seriously harmed. Our ability to replace these key
employees may be difficult and may take an extended period of time because of
the limited number of individuals in the biotechnology industry with the breadth
of skills and experience required to develop and commercialize products
successfully. Competition to hire from this limited pool is intense, and we may
be unable to hire, train, retain or motivate such additional personnel.
WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING COMPETING PRODUCTS BEFORE OR MORE SUCCESSFULLY
THAN WE DO
The biopharmaceutical industry is highly competitive. Our success will depend on
our ability to develop products and apply technology and our ability to
establish and maintain a market for our products. Potential competitors in the
United States and other countries include major pharmaceutical and chemical
companies, specialized biotechnology firms, universities and other research
institutions. Many of our competitors have substantially greater research and
development capabilities and experience, and greater manufacturing, marketing
and financial resources than we do. Accordingly, our competitors may develop
products or other novel technologies that are more effective, safer or less
costly than any that have been competing or are being developed by us or may
obtain FDA approval for products more rapidly than we are able. Technological
development by others may render our products or product candidates
noncompetitive. We may not be successful in establishing or maintaining
technological competitiveness.
BECAUSE THE MARKET FOR THROMBIN INHIBITORS IS COMPETITIVE, OUR PRODUCT MAY NOT
OBTAIN WIDESPREAD USE
We plan to position Angiomax as a replacement to heparin, which is widely-used
and inexpensive, for use in patients with ischemic heart disease. Because
heparin is inexpensive and has been widely used for many years, medical
decision-makers may be hesitant to adopt our alternative treatment. In addition,
due to the high incidence and severity of cardiovascular diseases, the market
for thrombin inhibitors is large and competition is intense and growing. There
are a number of thrombin inhibitors currently on the market, awaiting regulatory
approval and in development, including orally administered agents.
THE LIMITED RESOURCES OF THIRD-PARTY PAYORS MAY LIMIT THE USE OF OUR PRODUCTS
In general, anticoagulant drugs may be classified in three groups: drugs that
directly or indirectly target and inhibit thrombin, drugs that target and
inhibit platelets and drugs that break down fibrin. Because each group of
anticoagulants acts on different components of the clotting process, we believe
that there will be continued clinical work to determine the best combination of
drugs for clinical use. We expect Angiomax to be used with aspirin alone or in
conjunction with other therapies. Although we do not plan to position Angiomax
as a direct competitor to platelet inhibitors or fibrinolytic drugs, platelet
inhibitors and fibrinolytic drugs may compete with Angiomax for the use of
hospital financial resources. Many U.S. hospitals receive a fixed reimbursement
amount per procedure for the angioplasties and other treatment therapies they
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perform. Because this amount is not based on the actual expenses the hospital
incurs, U.S. hospitals may have to choose among Angiomax, platelet inhibitors
and fibrinolytic drugs.
FLUCTUATIONS IN OUR OPERATING RESULTS COULD AFFECT THE PRICE OF OUR COMMON STOCK
Our operating results may vary from period to period based on the amount and
timing of sales of Angiomax to customers in the United States, the availability
and timely delivery of a sufficient supply of Angiomax, the timing and expenses
of clinical trials, the availability and timing of third-party reimbursement and
the timing of approval for our product candidates. If our operating results do
not match the expectations of securities analysts and investors as a result of
these and other factors, the trading price of our common stock may fluctuate.
RISKS RELATED TO OUR INDUSTRY
IF WE DO NOT OBTAIN FDA APPROVALS FOR OUR PRODUCTS OR COMPLY WITH GOVERNMENT
REGULATIONS, WE MAY NOT BE ABLE TO MARKET OUR PRODUCTS AND MAY BE SUBJECT TO
STRINGENT PENALTIES
We do not have a product candidate approved for sale in the United States or any
foreign market except New Zealand. We must obtain approval from the FDA in order
to sell our product candidates in the United States and from foreign regulatory
authorities in order to sell our product candidates in other countries. We must
successfully complete our clinical trials and demonstrate manufacturing
capability before we can file with the FDA for approval to sell our products.
The FDA could require us to repeat clinical trials as part of the regulatory
review process. Delays in obtaining or failure to obtain regulatory approvals
may:
- delay or prevent the successful commercialization of any of our product
candidates;
- diminish our competitive advantage; and
- defer or decrease our receipt of revenues or royalties.
The regulatory review and approval process is lengthy, expensive and uncertain.
Extensive pre-clinical data, clinical data and supporting information must be
submitted to the FDA for each additional indication to obtain such approvals,
and we cannot be certain when we will receive these regulatory approvals, if
ever.
In addition to initial regulatory approval, our product candidates will be
subject to extensive and rigorous ongoing domestic and foreign government
regulation, as we discuss in more detail in "Business--Government Regulation."
Any approvals, once obtained, may be withdrawn if compliance with regulatory
requirements is not maintained or safety problems are identified. Failure to
comply with these requirements may also subject us to stringent penalties.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN PATENT PROTECTION FOR OUR PRODUCTS, AND
WE MAY INFRINGE THE PATENT RIGHTS OF OTHERS
The patent positions of pharmaceutical and biotechnology companies like us are
generally uncertain and involve complex legal, scientific and factual issues.
Our success depends significantly on our ability to:
- obtain patents;
- protect trade secrets;
- operate without infringing the proprietary rights of others; and
- prevent others from infringing our proprietary rights.
We may not have any patents issued from any patent applications that we own or
license. If patents are granted, the claims allowed may not be sufficiently
broad to protect our technology. In addition, issued patents that we own or
license may be challenged, invalidated or circumvented. Our patents also may not
afford us protection against competitors with similar technology. Because patent
applications in the United States are maintained in secrecy until patents issue,
others may have filed or maintained patent applications for technology used by
us or covered by our pending patent applications without our being aware of
these applications. In all, we exclusively license 10 issued United States
patents and a broadly filed portfolio of corresponding foreign patents and
patent applications. We have not yet filed any independent patent applications.
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We may not hold proprietary rights to some patents related to our product
candidates. In some cases, others may own or control these patents. As a result,
we may be required to obtain licenses under third-party patents to market some
of our product candidates. If licenses are not available to us on acceptable
terms, we will not be able to market these products.
We may become a party to patent litigation or other proceedings regarding
intellectual property rights. The cost to us of any patent litigation or other
proceeding, even if resolved in our favor, could be substantial. If any patent
litigation or other intellectual property proceeding in which we are involved is
resolved unfavorably to us, we may be enjoined from manufacturing or selling our
products and services without a license from the other party, and we may be held
liable for significant damages. We may not be able to obtain any required
license on commercially acceptable terms, or at all.
IF WE ARE NOT ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL, OUR TECHNOLOGY AND
INFORMATION MAY BE USED BY OTHERS TO COMPETE AGAINST US
We rely significantly upon unpatented proprietary technology, information,
processes and know how. We seek to protect this information by confidentiality
agreements with our employees, consultants and other third-party contractors, as
well as through other security measures. We may not have adequate remedies for
any breach by a party to these confidentiality agreements. In addition, our
competitors may learn or independently develop our trade secrets.
WE COULD BE EXPOSED TO SIGNIFICANT LIABILITY CLAIMS IF WE ARE UNABLE TO OBTAIN
INSURANCE AT ACCEPTABLE COSTS AND ADEQUATE LEVELS OR OTHERWISE PROTECT OURSELVES
AGAINST POTENTIAL PRODUCT LIABILITY CLAIMS
Our business exposes us to potential product liability risks which are inherent
in the testing, manufacturing, marketing and sale of human healthcare products.
Product liability claims might be made by consumers, health care providers or
pharmaceutical companies or others that sell our products. These claims may be
made even with respect to those products that are manufactured in licensed and
regulated facilities or that otherwise possess regulatory approval for
commercial sale.
These claims could expose us to significant liabilities that could prevent or
interfere with the development or commercialization of our products. Product
liability claims could require us to spend significant time and money in
litigation or pay significant damages. We are currently covered, with respect to
our commercial sales in New Zealand and our clinical trials, by primary product
liability insurance in the amount of $20.0 million per occurrence and $20.0
million annually in the aggregate on a claims-made basis. This coverage may not
be adequate to cover any product liability claims. As we commence commercial
sales of our products, we may wish to increase our product liability insurance,
and we will need to extend the coverage of our product liability insurance to
cover our commercial sales of Angiomax in the United States. Product liability
coverage is expensive. In the future, we may not be able to maintain or obtain
such product liability insurance on reasonable terms, at a reasonable cost or in
sufficient amounts to protect us against losses due to product liability claims.
RISKS RELATING TO THE OFFERING
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF
YOUR INVESTMENT
Prior to this offering, there has been no public market for shares of our common
stock. An active trading market may not develop following completion of this
offering, and if it develops, may not be maintained. The initial public offering
price for the shares will be determined by negotiations between us and
representatives of the underwriters. This price may not be indicative of prices
that may prevail later in the market.
The market price of our common stock, like that of the common stock of many
other biotechnology companies, may be highly volatile. The stock market has
experienced extreme price and volume fluctuations. This volatility has
significantly affected the market prices of securities of many biotechnology and
pharmaceutical companies for reasons frequently unrelated, or disproportionate,
to the operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of our common stock. Factors
that may have a significant effect on the market price of our common stock
include announcements of technological innovations or new commercial products by
us or our competitors, disclosure of results of clinical testing or regulatory
proceedings, developments in patent or other proprietary rights, including as a
result of any public policy concerns and public concern as to the safety of
products developed by us.
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OUR OFFICERS AND DIRECTORS, AND ENTITIES WITH WHICH THEY ARE AFFILIATED, MAY BE
ABLE TO CONTROL THE OUTCOME OF MOST CORPORATE ACTIONS REQUIRING STOCKHOLDER
APPROVAL
After this offering, our directors and officers, and entities with which they
are affiliated, will beneficially own, in the aggregate, approximately 69.4% of
our outstanding common stock. Due to this concentration of ownership, these
stockholders as a group will be able to elect the directors and officers of our
company, control the management and affairs of our company and control most
matters requiring a stockholder vote, including:
- the amendment of our organizational documents; or
- the approval of any merger, consolidation, sale or assets or other major
corporate transaction.
WE HAVE ANTI-TAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION AND
COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK
Provisions of our certificate of incorporation and bylaws and of Delaware law
could have the effect of delaying, deferring or preventing an acquisition of our
company. For example, we have divided our board of directors into three classes
that serve staggered three-year terms, we may authorize the issuance of up to
5,000,000 shares of "blank check" preferred stock, our stockholders may not take
actions by written consent and may not call special meetings of stockholders,
and our stockholders are limited in their ability to introduce proposals at
stockholder meetings.
THERE IS A LARGE NUMBER OF SHARES THAT MAY BE SOLD IN THE MARKET FOLLOWING THIS
OFFERING. THIS MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK
Sales of a substantial number of our common stock in the public market following
this offering could adversely effect the market price of our common stock by
causing the market price of our common stock to decline. This could impair our
ability to raise capital in the future through the issuance of common stock.
Within 180 days after the completion of this offering, assuming that this
offering closed on July 31, 2000, 23,324,923 shares held by existing
stockholders, which will be subject to "lock-up" agreements, will become
available for sale and approximately 427,388 shares subject to options will be
vested and exercisable and warrants to purchase 3,269,564 shares of common stock
will be exercisable. Please see "Shares Eligible for Future Sale" for a complete
description of the number of shares which will be available for future sale.
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